By Alison Williams, Energy Analyst, Bloomberg Government

As Congress takes up hearings on the Department of Energy’s loan guarantee program, stemming from the failure of the solar energy company Solyndra, Bloomberg Government takes a deeper look at the the program and the many energy projects that received loan guarantees under Section 1705.  The report, “Beyond Solyndra: An Analysis of DOE’s Loan Guarantee Program” (subscription required), energy analyst Alison Williams evaluates the program and shows:

Loan Guarantees As Policy Tools Are Widely Misunderstood —

When the government agrees to a loan guarantee, it promises to pay off the debt if the borrower doesn’t. If the borrower pays the debt, the government incurs no cost for its guarantee. In energy, loan guarantees help new-to-market companies or technologies overcome the so-called “valley of death” — when a company or technology is too established to receive start-up venture capital yet not established enough to afford traditional debt financing.

Lower-Risk Energy Guarantees Far Outweigh Higher-Risk Ones —

This study finds that default is much less likely for power generation projects, which are 87 percent of loan guarantee value under the 1705 program, because DOE required them to find buyers for the generated power. As a result, these projects have a committed revenue stream that gives lenders confidence that project backers will be able to pay off debt. Manufacturing, fuel production and storage projects, which make up the remaining 13 percent of the portfolio value, were not required by DOE to find buyers to receive guarantees.

The Program Planned for Failure —

The DOE was appropriated $2.47 billion in credit subsidy costs—essentially an insurance fund to cover project losses. Beyond the two current project defaults, this fund could cover total defaults of all eight of the remaining higher-risk projects and have money in reserve.

Ending DOE’s Loan-Guarantee Authority Would Not Result In Budget Savings and Would Potentially Hinder Energy Development —

Loan-guarantee commitments are not included in the federal budget, which is limited to direct expenditures. So far, the DOE’s Loan Guarantee Program has paid for itself with fees from applicants. Future overhead would also be paid with applicant fees. Ending DOE’s loan-guarantee authority would have no budgetary impact and may jeopardize the remaining projects under review, calling into question the potential of new-to-market energy projects for renewable, nuclear power, advanced fossil fuel and carbon technology.

Study by Matt Barry

The U.S. Supreme Court is expected in June to decide the fate of President Barack Obama’s health-care overhaul law, the Patient Protection and Affordable Care Act. Its ruling will also determine the fate of more than $1.2 trillion in federal revenue that’s projected to go to the health-care industry under the terms of the law.

The high court can go a number of ways in rendering a decision, making it difficult for insurers and health-care providers to know what business landscape awaits them.

Part 1 of this Bloomberg Government Study examines the financial impact that several potential decisions by the court may have on health insurers. Whether the court upholds all, none, or parts of the law, insurers have the most at stake. Part 2 will assess the impact on hospitals, nursing homes and other health-care industry providers.

The study uses the data sets of four independent sources from government and nonprofit research organizations to derive this new assessment of the revenue at stake for health-care insurers and providers.

Read the complete study here. For access to the study please contact us.

May 14 (Bloomberg) — Bloomberg Government economists Nela Richardson and Christopher Payne discuss how the JPMorgan Chase & Co.’s “egregious” trading blunder actually shows that the regulatory system is working. (Source: Bloomberg)

May 9 (Bloomberg) — Cady North, a finance policy analyst with Bloomberg Government, and Bloomberg Television’s Peter Cook discuss the progress of implementing the Dodd-Frank Wall Street Reform and Consumer Protection Act and former Federal Reserve Chairman Paul Volcker’s testimony today before a Senate Banking subcommittee. They speak with Scarlet Fu on Bloomberg Television’s “InBusiness.” (Source: Bloomberg)

Bloomberg Senior Economic Analyst, Nela Richardson, is joined by HUD Secretary Shaun Donovan; James Lockhart, Vice Chairman WL Ross and Former Director FHFA; and Jim Millstein, Chair and CEO of Millstein & Co and former Chief Restructuring Officer of the US Treasury.

Panelist talked about the state of the housing market and how to fix it.   Secretary Donovan discussed the Obama Administration’s policies to try to jump start the housing market.  Both Lockhart and Millstein highlighted the importance of reforming the mortgage giants Freddie Mac and Fannie Mae, currently under government conservatorship. All agreed that the government should reduce its role in the housing sector and encourage private capital to return to the mortgage market.

By David Evans and Rachel Yu | May 03, 2012 01:02PM ET

An $850,000 grant to pave parking lots with solar panels is testing whether the government can foster innovation and commercialize new technology through small businesses.

The U.S. Transportation Department three years ago offered a grant for development of an environmentally friendly pavement system capable of generating its own power. Scott Brusaw, co-founder of Idaho-based Solar Roadways, won a grant from the Federal Highway Administration, one of many offered by 11 federal agencies through the Small Business Innovation Research program. The energy created by solar panels would replace energy that is currently drawn from the power grid. It could be used to power buildings, such as homes and businesses, and illuminate streetlights.

The program, coordinated by the Small Business Administration, takes 2.5 percent of federal extramural research budgets of more than $100 million and designates it as contracts or grants for small businesses of fewer than 500 employees.

By Rob Barnett | May 02, 2012

Low natural gas prices combined with new environmental requirements are taking a bite out of coal-fired power. The Environmental Protection Agency ratcheted up the pressure on coal last month when the agency proposed new regulations that aim to curb greenhouse gas emissions. Our new Bloomberg Government study, The Twilight of Coal-Fired Power, assesses EPA’s recently proposed greenhouse regulations.

Although EPA’s proposal would effectively ban the construction of new coal-fired power plants, the study concluded that this isn’t a departure from business as usual. This is because new coal power plants are an out-of-the-money investment based on current coal and natural gas prices. Natural gas has been the default fuel of choice for new power plants for nearly two decades, and a rule that bans coal isn’t going to shift investment patterns in the power sector in the short-run. However, permanently removing conventional coal-fired power as an option for new electric power is an unprecedented move by EPA.

The report concludes that coal will slowly lose market share as a result of both environmental regulations and the compelling economics of natural gas. This puts coal producers, especially higher-cost producers located in Appalachia and the Eastern half of the U.S., in a tenuous position: With expectations for declining demand from the power sector, coal producers will need to seek new markets in order to survive.

Rob Barnett is an energy analyst at Bloomberg Government. He was an associate director of climate change and clean energy at IHS Cambridge Energy Research Associates. Barnett holds a master’s degree in economics from Boston University and an undergraduate and master’s degree in electrical engineering from Clemson University.

To get access to this study and more, contact us.